Super! Obama to release part of strategic oil reserves

posted at 1:10 pm on June 23, 2011 by Jazz Shaw

While everyone is briefly fixated on foreign policy questions following the president’s speech on Afghanistan, the White House quietly let slip that it was taking some action on the energy policy front. What’s that you say? Are they issuing new permits or easing EPA restrictions on exploration? No, no, silly rabbit. The president is going to dump off some of the strategic petroleum reserve.

Wary of a new surge in gas prices, the Obama administration has decided to release 30 million barrels of oil from the country’s emergency reserve as part of a broader international response to lost oil supplies caused by turmoil in the Middle East and North Africa, particularly Libya.

The release from the U.S. Strategic Petroleum Reserve will amount to half of a 60 million barrel international infusion of oil planned for the world market over the next month.

“We are taking this action in response to the ongoing loss of crude oil due to supply disruptions in Libya and other countries and their impact on the global economic recovery,” Energy Secretary Steven Chu said Thursday.

Well, that’s just fabulous, isn’t it? (By the way, is it too early for a martini?) The wapo gets one thing right in their coverage, noting that traditionally the release of SPR stores is done in times of emergency, usually when the flow of oil is abruptly and severely reduced. Typical examples have been when hurricanes mow through the off shore fields and shut down production for weeks or months.

So what is the emergency in this case, since Libya really doesn’t account for all that much of the world supply? The administration may have already given us a hint.

Republicans have repeatedly slammed President Obama over the unusually high prices, and Obama himself has noted his poll numbers appear to rise and fall with the price of gasoline. Many political strategists say that voter anger over near-record oil and gasoline prices could be a determining factor in the 2012 elections.

Oh, yes. We’re doing this in response to an emergency all right. The emergency is that the president’s poll numbers are tanking and angry voters don’t want to continue to lay out 1/4 of their pay check at the pumps. But rather than actually do something to speed up domestic production and make us more energy independent, let’s just flush away some of the reserve we might really need if the you-know-what seriously hits the fan overseas in the next 12 months. Simply fabulous.

The release makes little sense for American markets. Crude and gasoline inventories are above average, and crude and gasoline prices have been trending down for weeks, despite the loss of Libyan oil, which markets have already adjusted to. The SPR was intended to be used for supply emergencies. There is no supply emergency. We don’t know what impacts this might have on markets long term. But we could and should be taking steps that would increase our own production by 2 million barrels a day or more for decades, which is possible if the government would grant much greater access to America’s ample oil and natural gas reserves. This would do vastly more to help consumers, increase energy security, create jobs and deliver more revenue to our government. It’s action that would truly strengthen our energy future, not a temporary gesture that has no lasting benefits.

30 million barrels is about what our nation consumes in a day-and-a-half. 60 million barrels (the total IEA release) is well under what the world consumes in a day.

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Comments

It makes no sense at all. There is no supply disruption, and the 30 million will have to be replaced in the SPR, presumably with oil priced much higher than it was when last filled.

The price break at the pumps will be quite temporary, so it doesn’t even make sense from the crude and cynical political angle of helping Obama’s poll numbers. Any boost there will have long disappeared by Labor Day, much less next year when he needs the help. Perhaps this is a test for a much larger release in late August 2012?

Through a process of what candidate Obama once called “gradual adjustment,” American consumers have seen prices at the pump rise 67 percent since he took office. Meanwhile, the vast undeveloped reserves that could help to keep prices at the pump affordable remain locked up because of President Obama’s deliberate unwillingness to drill here and drill now. We’re subsidizing offshore drilling in Brazil and purchasing energy from them, instead of drilling ourselves and keeping those dollars circulating in our own economy to generate jobs here.

This is an excellent campaign issue to make hay on. Now we have to replenish the reserve. Let’s see, how will America make that happen? Who will make it happen? Let’s review the track records of the candidates….

wreck the economy – check
over extend the military – check
create social and demographic chaos – check
divide the nation into segments and pit them against each other – check
raise energy prices- check
raise food prices-check
put majority of population on govt reliance programs-check
waste what resources we have in reserve-check

More smoke and mirrors. The last time oil was released from the SPR it only effectively decreased prices by $.01 – $02. The most immediate way to reduce fuel prices would be to suspend gasoline taxes. The federal tax is currently $.184 cpg.
-http://www.gaspricewatch.com/usgastaxes.asp

How much money are the American people going to lose when it’s time to replenish the strategic reserve? Considering your idiotic energy (reduction) policies, I’m certain it’ll take a bundle to buy back the amount that’s being released (a day late and a dollar several bazillion dollars short).

Sorry about that. I didn’t mean to step on your post; just time for a hit ‘n’ run until later.

Even Ojugears isn’t stupid enough to think this is worth a tinker’s damn. It’s more of the same; all show and no substance. I’m starting to believe Biden would be better, and that is most definitely not a compliment to His Oneness.

That is NOT what its intended for ! its STRATEGIC not Economic ! if you want to effect the oil market jackass ( to obummer) then let us companies drill here now.
JESUS why do I bother. They dong give a shit about us.

How about getting the EPA and state regulators to issue oil well drilling permits and water injection permits to increase America’s domestic oil supply, you moron?

Remember the gulf oil spill? One well produced 70,000 barrels of oil and would’ve supplied much needed oil to Americans. That also destroys the theory of waiting 10 years for Alaskan oil production, all that’s needed is to say yes to drilling and Americas economy would thrive.

All of you people against selling the SPR are also against auctioning off federal land I assume?

ggoofer on June 23, 2011 at 10:58 PM

You ARE aware that we’ll have to replenish the oil we release from SPR at the much higher current prices, so this political stunt for Obama’s benefit, completely unnecessary and inappropriate in context of the purpose of the SPR, will end up costing the taxpayers money, right?

Just an application of the Rush Theorem on liberals. They will always tell you who/what they’re afraid of. Heh.

Caststeel on June 23, 2011 at 6:43 PM

They also tell you that the opposition is doing what they have done with hopes that some of the damage sticks to the opposition. They will also tell you that the opposition has or will do something underhanded they would do if they were in the oppositions position.

We’ll have to replace the oil “released” within 60 days. There is almost ZERO percent chance that oil will be under $100 per bbl. during that time.

So essentially what Obama just did was take 3/4 of a billion dollars and threw it away.

Yeah. . . BRILLIANT!

Jason Coleman on June 23, 2011 at 4:30 PM

It is of course all about getting votes and using taxpayer dollars is not a problem for him. As far as paying it back, if he loses, it is no skin off his nose and if he wins, the cost of socialism, or his socialist marxist utopia will insure it never is replaced.

How this is suppose to benefit him since it will not benefit us has a few possibities.

It could be as simple as the democrates and their socialist/communist handilers looking for ways to finance their programs, especialy since they may not have the ablity to borrow and spend or tax and spend in the future as freely as they have in the past. Keep in mind that Socialism is the middle step from Capitalism to Communism as Marx and Engles so well pointed out. For socialism to succeed, it must fail and that means it must fail economically so that the only way out is by the government taking control of all forms of business and individual liberties and decision for the social equality of all; the elite leaders who have to make the decisions for the state excluded of course.

It could be a way of keeping Italy in line, especially since Europe, not the US, is the major buyer of Libya oil. Any oil released, as it was when Clinton did this, will not likely go to any US buyers or refiners nor find it way back into our gas pumps.

This could be a test to see if there will be any major legal issues to be dealt with before they could have a negative impact on Obama’s re-election. If this goes okay, they may be more releases with claims that he has kept the price of gas from going even higher than it is at any given time of the predictable speech. Those who would vote for him because he says he kept gas prices lower would take his word hook line and sinker because they have no desire or possibility of understanding how he could be wrong and he knows that. Keep in mind he is aiming at the grassroots, which to a socialist means the lowest common denominator of the “working familes” as defined by the socialist and communist pushing for their “American Dream” of “Social Justice”.

There is a quiet concern over the health of Chavez and his ability to remain in power with the failure of his socialist government to meet even basic needs. More of a concern is the increasing likelyhood that he may not be a realiable sorces of future oil. We do buy and refine that oil, so it would have a strong effect on our price of gas. Obama could justify releasing oil and claim that gas prices would have been higher if he had not done so, even though most of it would flow overseas to buyers, which means more money for funding the socialist agenda and goals.

One conclusion we can rely on is that selling off our emergences reserves are not for our benefit, but have a benefit for his relection.

In fact, there’s little evidence that the latest surge in oil prices is the result of strong demand straining tight supplies. Despite the loss of Libyan production, about 1.5 million barrels a day, oil markets are well supplied — largely because OPEC countries have been producing well above their official quotas.
…Despite adequate supplies and weakening demand, oil has been trading well over $100 a barrel. That’s prompted calls to try to eliminate the added premium created by investors who have placed big bets on higher oil prices. Earlier this month, French President Nicolas Sarkozy called for tighter controls on the speculators, whom he blames for spiraling food and energy prices.

Chasing speculators out of the market could have a substantial and rapid impact on prices.

Hmm. Now THAT’S odd! Ed and the other speculator defenders have been telling us for a few years now that oil prices have been purely based on supply and demand. It doesn’t appear that this is the case. Who knew?

I don’t like releasing oil from the reserve in order to prop falling poll numbers. I also don’t like subsidizing the profits of speculators. I’m kinda funny that way, though.

Can’t have all that extra oil laying around when the economy heads into a double dip next spring. True emergencies will abound and the lack of a strategic oil reserve will be crucial to the usurper’s attempt at a total power grab. Marshall Law will only be the beginning. It’s not a conspiracy if they are really trying to do it.
Top down….bottom up…..

What bothers most everybody that does not follow the oil system closely is what would happen if any of the states gets slammed by a hurricane like in the past.

If my government had stored emergency supplies, diapers, first-aid, water etc. and all of a sudden he decides to open that storage not to replenish nor to take care of expired items, but to get rid of them with a lame excuse that makes people really uneasy and angry.

Then a hurricane comes, we get hit and there’s barely anything stocked for emergencies following a natural disaster. We have to do the usual for ourselves (example: Joplin) and wait for other countries and other families to give us stuff and cash. And hope and pray that any monies are not slurped by the Red Cross or Salvation Army.

You ARE aware that we’ll have to replenish the oil we release from SPR at the much higher current prices, so this political stunt for Obama’s benefit, completely unnecessary and inappropriate in context of the purpose of the SPR, will end up costing the taxpayers money, right?

Or are you just another leftist toady?

Adjoran on June 24, 2011 at 12:17 AM

I am not aware of all the intricacies of the SPR. But WHY should the government be hoarding assets like this? I would argue that whatever policy says we need to replenish the SPR to some level should be thrown out. Also, the argument that this oil will need to be replaced at much higher prices is totally bunk. It doesn’t matter how much we paid for the oil when we got it. It is an asset worth some amount of money today (regardless of what was paid for it). We sell it and are paid the market price. If we buy it back, we buy it for the market price. (And if you are sure the market price will be a lot higher, then I suggest taking out as many home equity loans as you can and investing heavily in out of the money call options on oil. You can make billions.)

I just want all of you to justify why the government should hoard oil and not things like land, food, gold, cars, etc., so that they can be given to the public in “case of emergencies” (or maybe you think they should)

I just want all of you to justify why the government should hoard oil and not things like land, food, gold, cars, etc., so that they can be given to the public in “case of emergencies” (or maybe you think they should)

ggoofer on June 24, 2011 at 10:15 AM

First of all, without oil our military is no good. So not only is your comparison already invalid, but if the government doesn’t ‘hoard’ some kind of reserve of it, we could be facing a serious security crisis if the regular supply is disrupted. No military commander worth $hit doesn’t want some kind of backup plan. (incidentally, the oil reserves should almost totally be limited to the military, it’s NOT there to bail out the public sector like this!)

The gov’t should be ‘hoarding’ gold (and silver) for the simple reason of backing the money it prints with something besides the promises of politicians. Also as a safety limit to keep the gov’t from simply running off as much as they like.

As to land, although there’s a balance, there IS a legitimate need for the gov’t to designate places for things like military bases and hazardous waste storage.